CHARLOTTE, N.C. — Pop Secret has continued to lose steam under the new ownership of Snyder’s-Lance, Inc. The microwave popcorn stalwart, challenged by category headwinds and competitive discounting, lost ground in the recent quarter, said Carl E. Lee, Jr., president and chief executive officer.
Still, Mr. Lee expressed confidence in the potential of the brand and the category during a Nov. 7 earnings call with financial analysts to discuss third-quarter performance.
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| Carl E. Lee, Jr., president and c.e.o. of Snyder's-Lance |
“Our renovation plans are under way with early ACV gains to report, plus on-line and print consumer advertising will be starting in Q4,” Mr. Lee said. “And we have product innovation scheduled for 2017. And we believe that the microwave popcorn category will rebound over time, as our marketing and sales team leverage their capabilities and experience to turn brands around.”
Net income attributable to Snyder’s-Lance, Inc. in the third quarter ended Oct. 1 was $29,315,000, equal to 30c per share on the common stock, up from $15,677,000, or 22c per share, in the year-ago period. Excluding special items, net income attributable to Snyder’s-Lance increased nearly 81% to $33,654,000 from $18,613,000.
Net revenue was $588,801,000, up 41% from $416,773,000. Excluding the contribution of the acquired Diamond Foods brands, net revenue increased 0.7% as growth in core brands offset declines in the company’s contract manufacturing business.
Behind Mr. Lee’s optimism in Pop Secret’s future is a series of successful brand overhauls generating recent growth for the company. The Snyder’s of Hanover pretzel brand, for example, gained nearly two full points of market share in the quarter on recent turnaround efforts.
“On a rolling 12-week basis, according to I.R.I. retail sales, we have turned back to growth as a result of our comprehensive brand renovation,” Mr. Lee said. “Key components of the marketing plan, including new product innovation and the successful limited-time offering of Itty Bitty Minis in time for back-to-school, expanding better-for-you offerings and our Pretzels Baby integration marketing plan, have all led to the results that we were expecting. The early results are very encouraging. We still have work ahead of us and additional plans to implement, as we push for further growth through the end of the year.”
Lance sandwich crackers also continue to benefit from recent brand investments in packaging, ingredients and taste completed last year.
“We have successfully leveraged this effort in the past to drive sales in category growth,” Mr. Lee said. “Year-to-date, Lance sandwich crackers share gains exceed 2.5 points.”
And the Cape Cod potato chips brand is outpacing category growth three to one, driven by promotional activity and distribution gains, Mr. Lee said.
“The brand delivered solid performance across the summer season across all channels,” he said. “Cape Cod is another great example of the long-term benefit of our renovation effort.”
As for Pop Secret, which Snyder’s-Lance added as part of its Diamond Foods acquisition earlier this year, year-to-date sales declined 11.1%, but results for the last four weeks of the period showed improvement, Mr. Lee said.
“While we have a ways to go, we remain confident in this category and our brand,” Mr. Lee said. “As advertising plans roll out, innovation arrives next year and distribution gains continue, we believe this brand can return to growth and re-energize the category.”
He added, “I think we are encouraged by the more consumer information we gather and the more research we do, we see a very good brand, positioned very well in the consumer’s mind. We also see a good category to participate in.
“I think as we’ve proven to you before, with Lance and Snyder’s, that we are able to really get behind brands and reinvigorate the brands and also the categories. We’ll just need to take our time to make sure we do it right with Pop Secret. And we leverage some of our past experience again with this category.
“So I would say we are showing some progress. It’s a little too early to say that everything we’ve planned is going to be in place as quickly as we want, but we’re making extremely good moves forward there. And we’re kind of optimistic about the category and the brand. We just want to make sure that we take time to do it right.”
For the nine months ended Oct. 1, net income was $23,565,000, or 26c per share, down from $43,642,000, or 62c, in the first nine months of the previous fiscal year. Net revenue year to date was $1,661,066,000, up from $1,250,542,000.
